While the COVID-19 pandemic has sparked many recent conversations about companies pivoting into new areas, there is a long history in the United States of businesses radically changing strategies to find success. Over the years, many of the nation’s largest companies reinvented how they operated, whether they changed core services, types of products they manufactured, target audiences or distribution strategies.
Here are 10 massively successful companies that reinvented their core businesses.
Amazon, one of the world’s highest-valued companies, originally started as an online retailer for physical books. When operations began in July 1995, it promoted itself as “Earth’s Biggest Bookstore,” and focused on competing with sizeable in-store book retailers such as Barnes & Noble and Waldenbooks. This approach was moderately successful, with Amazon carrying more than 2.5 million different book titles. When Amazon went public in 1997, there was little indication it would eventually dominate e-commerce and cloud computing, as it does today.
In 2000, Amazon launched its Marketplace so third parties could also list items online, which dramatically increased Amazon’s selection and revenue. The third-party marketplace, combined with Amazon directly selling more than just books, made Amazon the go-to online retailer. Later, in 2006, Amazon began offering cloud computing services that today lead the industry.
American Express, a financial services giant, was founded in 1850 with an emphasis on express mail, where it transported valuable goods, stock certificates and currency throughout its home state of New York and later other states. Throughout the late 1800s, the company added money orders and traveler’s checks to its portfolio. However, in the mid-1900s, American Express reinvented itself and what it was best known for by offering a charge card that extended credit to consumers and businesses. As of December 2019, the company had more than 110 million credit cards in use, including about 55 million cards in the U.S.
Chipotle Mexican Grill
One of the most recent major business reinventions — that of fast-food player Chipotle Mexican Grill— occurred during the COVID-19 pandemic. Chipotle has long been known for its counter-service approach, where customers walk in and order custom burritos, bowls, tacos and other items. However, in 2020, the company has significantly invested in high-margin drive-thru pickup lanes that it calls “Chipotlanes.” These drive-thru lanes exist primarily for mobile pickup orders, which means more customers can be served in a short amount of time, and it caters to customers concerned about COVID-19 because they don’t have to go into the store. Chipotle launched its 100th Chipotlane in July 2020, and it intends to hire as many as 10,000 new workers to support this new initiative.
Corning, a world leader in glass, ceramics and industrial material manufacturing, initially found success in the mid-to-late 1800s by mass-producing glass for Thomas Edison’s light bulbs. The company continued to innovate and reinvent what it could do with glass. It notably created the Pyrex durable cookware line, optical fiber that paved the way for internet telecommunication adoption and the hard-to-break Gorilla Glass used on technology products such as the Apple iPhone, iPad and Watch.
One of the strangest business pivots ever might be that of the popular children’s modeling clay Play-Doh, which was first sold as a cleaner that could remove coal residue from wallpaper in the 1930s.
For much of its history, IBM had been one of the world’s top manufacturers of computing machines, computer equipment and mainframes. But in the early 1990s, the company had to change course because its hardware business faced steep competition. In 1993, the company posted a staggering $8 billion quarterly loss. To turn the company around, executives made the bold decision to abandon hardware areas such as computer chips, hard drives and printers. Instead, IBM would focus on software, IT consulting services, and computing research, and this move brought the company back to profitability and improved its reputation. IBM’s spirit of reinvention continues with its 2020 decision to split into two companies, one that is focused on cloud computing and artificial intelligence and one that provides managed IT services.
Netflix, one of the world’s top streaming entertainment providers, started in 1998 as a company that allowed consumers to rent and buy physical DVD movies. The company quickly added a subscription offering in 1999 where people could rent as many DVDs as they wanted, receiving rentals in the mail. After seeing enormous success with its physical DVD rentals, executives decided in 2007 to focus on streaming content that could be accessed instantaneously via the internet and to move away from physical media. Netflix’s decision to invest in streaming and de-emphasize DVD rentals changed the entire entertainment landscape and today, the company is worth more than $200 billion.
One of the strangest business pivots ever might be that of the popular children’s modeling clay Play-Doh, which was first sold as a cleaner that could remove coal residue from wallpaper in the 1930s. As oil and gas furnaces became more popular in the 1950s, demand fell for the product and the makers considered getting rid of the business. The owners heard about a schoolteacher using the clay in arts and crafts classes in their hometown of Cincinnati. After realizing the potential of a children’s product, they quickly pivoted with a more colorful product. It steadily became a toy one could buy in stores nationally by the end of the 1950s. Today, Play-Doh is owned by Hasbro, and more than two billion cans of the product have been sold.
Slack, a popular business collaboration and chat application, began as a company called Tiny Speck that made a computer game called Glitch. The game itself was a flop and was shut down in 2012. However, one aspect of the game that stuck was the interactive, colorful chat functionality that players and employees used. Once Glitch officially shut down and the team realized the powerful collaboration tool had on its hands, it launched the Slack app in 2013. Slack grew quickly, and the company went public in 2019. The company has more than 119,000 paying customers and more than 12 million daily active users as of late 2020.
When the hugely successful coffee chain Starbucks opened in the early 1970s, its few stores in Seattle only sold coffee beans and coffee-making equipment. Starbucks director of marketing and retail operations Howard Schultz convinced the owners of Starbucks to sell it to him and a few investor partners to transform it. Schultz pivoted the stores into coffeehouses where you could buy prepared coffee as well as buy beans. The company thrived under Schultz’s leadership, and he eventually stepped down as its chief executive in 2000. Schultz then reinvented the company again when he returned as CEO in 2008. In his second stint as CEO, Schultz pushed Starbucks to embrace technology to engage customers better. Today, the Starbucks app is the most regularly used loyalty rewards app among major restaurant chains.
Google-owned streaming video service YouTube is among the most visited websites globally, with billions of videos being consumed there daily. However, the site was started in 2005 by co-founders Jawed Karim, Steve Chen and Chad Hurley as a dating website. They even took out ads offering to pay people $20 a pop to post videos of themselves. The approach failed, but as users of the site began to post whatever videos they felt like uploading, the founders embraced the idea. They revamped the website to make it easier for people to upload nearly anything. Google purchased the site in November 2006 for $1.6 billion in stock. As of May 2019, users upload more than 500 hours of video on the site every minute.
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Published December 04, 2020